4 Important Cash Accounts for T&L Businesses

Content Provided by: Dan Rutherford, Virtual CFO Summit Virtual CFO Services by Anders

A solid amount of cash on hand will help protect your business against unexpected disruptions, but don’t stop there. You need different cash accounts for different for different purposes, and we recommend keeping them in separate accounts so that you always know what you have:

  • Operating cash (for paying bills)
  • Cash reserves (cash-on-hand)
  • Tax reserves (for Uncle Sam)
  • Line of credit (for emergencies)

Here’s why you need each:

Operating Cash: Paying Bills on Time

For your Operating Cash account, you move money from where you receive revenue from Accounts Payable into your account for Operating Cash, no math required.

Your business will suffer if you’re not taking care of operating costs. But you need to pay for those costs from a separate account so you can understand them and any major swings.

Cash Reserves: How Much Cash on Hand Do You Need?

You can be generating significant profits and still go out of business if you’re burning through your cash blindly.

Rather than follow the common rule-of-thumb of keeping two months’ worth of expenses (since that number can change), keep 10% to 30% of your net income on hand.

You’re good to keep just 10% if your business has…

  • High recurring revenue
  • A strong pipeline
  • Zero or low Accounts Receivable (AR) days
  • A strong mixture of clients
  • No single client that accounts for more than 10% of your revenue

However, if the opposite is true (e.g., low recurring revenue, a single client accounting for much or your revenue, and high AR days), you need to try to reach the higher end. You won’t create your reserve overnight, but you want to start building up as soon as possible.

Tax Reserves: How Much Do I Need to Put Away for Uncle Sam?

Nobody enjoys paying taxes, but the last thing you want is to come up short during tax season.

A separate cash account for taxes can also help you avoid shocks to your business by writing huge checks (and added penalties).

Your tax reserve should be 40% of your company’s net income before taxes. You may pay less, but better safe than sorry.

Your estimated taxes are based on your previous years’ income statements, divided by 4. Even if your business is brand new with no previous income history, you still need to pay those estimated quarterly taxes to avoid potential penalties.

Line of Credit: Cash When You Need It Most

A line of credit can feel like a loan, and this can make some businesses nervous to open one. But really, you get the line of credit and hope you never need it. It’s just there for major emergencies – and major opportunities that come your way.

Your business should have lines of credit (LOCs) that cover 80% of your receivable balance. That 80% excludes your bad receivables.

To get a line of credit, you need clean accounts receivables. If your books are messy, you may need to hire a CPA to help you get your books in order. Banks will look to see:

  1. That you’re the amount you want in your LOC makes sense with how much income your business is earning
  1. That you’ll be able to pay off your LOC if you use it

For a sustainable business, keep good books.

With higher operating costs and slimmer margins, surviving in the transportation industry as a small business owner or owner-operator has never been more challenging. However, with a better approach to cash management, Brokers, Freight Forwarders and 3PLs give themselves a better shot at surviving the bumps in the road.

Why the Transportation and Logistics Industries Need a Virtual CFO More Than Ever

By Dan Rutherford, Virtual CFO and Transportation + Logistics Industry Expert for Summit Virtual CFO by Anders

[email protected]


I got into transportation and logistics 20-plus years ago when a family friend reached out to me. (I had just wrapped up more than a decade with the IRS, so I wasn’t used to getting invited out to lunch all that often.) His business was growing, and he was feeling anxious that he had a lot of questions and not all the answers. He thought he needed a little more firepower in the accounting room, so he started to pick my brain.

Transportation and logistics became my niche. I’ve worked with companies that are more heavily into the transportation side (the company owns the asset) and companies that are more heavily into the logistics side (non-asset base, brokerage operation). I’ve also run a $127- million logistics division of a large company, so I’ve seen the industry from multiple perspectives.

It’s a complicated accounting model. There are a lot of moving parts, literally. You’ve got fuel, driver wages, got repairs on the road. It can be an accounting nightmare, with all the operations people that need access to cash (unless you want a call in the middle of the night because someone’s truck broke down). You have to relinquish some control – and control what you can.

But it’s also really rewarding. A lot of companies will just be looking at their cash one week out. They want to get through the week, but at the same time they have big growth goals and no real plan to get there. It’s like saying you want to get to California, getting in your car and heading west. You might get there, but you have no idea when.

A Virtual CFO can give clients a roadmap, a plan for where they’ll be tomorrow and the next day. Once you help clients set up their KPIs and understand their cash flow, they don’t have to guess anymore. There are no surprises. And there’s a lot of potential upside if they stay ready to capitalize on possible opportunities.

A lot of the Virtual CFO job–about 80%–is the same for any industry. At Summit, we focus on business fundamentals that are valid across the board. But about 20% is industry specific, and you learn that not just by reading up on it, but by working closely with companies and learning their vernacular. (Talking to other people who have worked in the industry doesn’t hurt either.)

Here’s what you need to know about offering Virtual CFO services to clients in transportation and logistics.

The transportation and logistics industry is a perfect match for fractional CFO services. It’s a capital intensive industry with a lot of moving parts to keep track of, if you want to be able to take advantage of the current surge in demand.

It’s also made up of small- to medium-sized operations that need financial services but can’t support a full time CFO. As of March 2023, 91.5% of trucking carriers operate six trucks or fewer. With a tractor costing upwards of $150,000 and trailer $35,000+, even those smaller companies will have a lot of capital on the line.

Making capital acquisitions decisions is harrowing for a business owner. A mom and pop operation will want a sounding board before they move forward. They often feel like they need direction – or even if they know what they need to do, they need someone to echo it back to them and show them in writing, “Here’s what this looks like.”

They also look to a VCFO for industry information outside their bubble. They only know what they know. They’re talking to the same people every day. But if you specialize in the industry, you’re bringing them that extra value of knowing the standards, the trends, the averages. Then,  when they need a solution to a problem, you can listen and say, “This is how I’ve seen it solved before.”

Forecasting changes the game

We’ve all seen the rollercoaster of fuel prices this past year. For most of us, it’s an annoyance when the pump drains our wallet a little faster than the last time. For the transportation industry, not staying on top of monitoring fuel from a cost and pricing standpoint could mean closing their doors.

We’ve also seen bigger ripples hit the industry: In March 2020, I saw companies whose business dropped by two thirds or more, only to rebound in July to record highs that are still climbing. For transportation and logistics companies, it’s not just about white-knuckling it through the scary times. It’s about being poised to take advantage of opportunity.

That’s where forecasting becomes invaluable. A lot of transportation and logistics companies are looking to next week, but if you want to answer questions like, “Does it make sense to purchase new equipment? Should I bring on new employees or can I get more productivity out of my existing workforce?” you need to look out one to two years.

If you’ve ever had a “dreamer” client, forecasting will be a game-changer. You know what I mean, the guy with his foot on the pedal who wants to grow X percent this year. With a forecast you sit down and say, “We don’t have the capacity to do that right now. We don’t have the people. But let’s figure out a plan to get to that capacity, and put some numbers behind it.”

Now they’ve got visibility into the future. That’s what gives the business owner value. You worry you’re going to out-run revenue, or you don’t know if an extra day of vacation is going to impact the bottomline. That’s when diving into the non-financial numbers is so important: The client starts to realize that the impact of a small decision can be huge.

Follow KPIs daily

If a company knows their KPIs, there will be no surprises when it comes to their financials. It may sound boring but it actually can turn into something really useful. In one company I worked with, we set up a dashboard that refreshed every hour. People loved watching it to see how they were doing. We set up friendly competitions, not to criticize people, but to encourage them. It was fun for them to see the gross profit for the month, compared to their individual activity and performance.

Owners who are willing to pay attention can figure out their KPIs just by walking around their yard and seeing how many empty trucks they have. That’s a good indicator right off the bat. In transportation, they’ll want to know things like average revenue per truck, average revenue per driver, revenue per mile and number of unseated trucks – per day, per week and per month. average revenue per driver. On the logistic side,  you’re monitoring performance per employee, gross profit per employee per day, per week, per month, and how many shipments they move.

But you also need to help them monitor to make sure it’s not garbage in, garbage out, and that they’re measuring the right things. I’ve seen people make the mistake of thinking their revenue per truck was a certain amount, but if it’s loaded with stuff, it shouldn’t be in an actual revenue number.

Look to losses to gauge risk levels

Sometimes you have to move a shipment and you lose money. In transportation, there are certain projects that are more profitable than others. If you move 50 loads a week for a client, you might lose on two or three of them.

Monitor the number of shipments that an employee handles, regardless of profit. Monitor the losses. It might seem counterintuitive, but if you’re not losing sometimes, it means you’re not taking enough gambles and you’re probably getting too conservative.

If you keep an eye on all those statistics, over the month your client should have some key insight to how they’re doing and if they’re profitable.

Meet weekly to eliminate surprises

If your clients have been working with a traditional bookkeeper or tax expert, they may not understand why you want to see them regularly. But once you set the cadence, and they see how well it lets them sleep, they’ll start to look forward to it.

I like to do a weekly cash flow meeting. It’s all of ten minutes, and it covers current cash but also the next twelve weeks. It takes the worry off their plate, lets them focus on running the business rather than worrying they’ll get caught without cash for payroll.

I also do weekly forecasting meetings as well as pipeline meetings, to see what they’ve got coming through. Then we do financial meetings, reviewing the KPIs and seeing how they did and why, whether it’s due to an industry-wide trend or something specific to them.

It’s fun to stay on track with the client. I set those meetings months in advance, so it makes it easy to stick to. It’s how I ensure they know the roadmap and have everything they need to execute our plan.

The weekly meetings also give us plenty of time to be strategic, rather than reactive. If things take an ugly turn – as they did at the start of the pandemic – we can build three different models to see what it looks like if things are better or worse than expected. If you do it for them on paper, before jumping in, they never are forced to just wing it.

“When is it time for a new line of credit?” “What happens if a recession hits?” “How long will it take me to double my revenue?” With Virtual CFO services, they’ll be ready to answer these questions.

HR as a Retention Strategy: Employee Pay


The Great Resignation: a term most leaders are probably tired of hearing but can’t ignore. So, instead, let’s talk about The Great Retention! We know tackling retention can be a daunting task, which is why we’re here to help you break it down and take it one step at a time.


Retention is becoming increasingly important as The Great Resignation shows no signs of slowing down.

“While U.S. workers are quitting in droves, employers are reporting record-high job openings—10.4 million in September—creating a scenario in which strained industries are competing for talent and driving up compensation.”SHRM

This means that not only are your leadership and HR teams feeling the impacts of these numbers, but your recruiting team is, and your employees likely are too. More competition in your industry means more pressure on your recruiting team, which probably means increased time in filling positions.

The effects don’t just stop there, though. Increased time in filling positions means more work on your people who are staying. This can lead to burnout and create a vicious cycle of resignations.

This is why it’s so important to take this seriously and try to get ahead of it. And if you’re still with us, that’s exactly what you’re doing!


While there’s no foolproof plan for keeping employees in any scenario, we’d like to share some strategies we’ve had success with at Nextep. We’re breaking it down to highlight how HR can be used to drive employee retention, starting with employee pay.


The Great Resignation and the impacts of an ongoing pandemic have long-lasting effects. As a result, employees are evaluating their personal and work lives and listing their non-negotiables. You’ll find that things like culture, work-life balance, and flexibility are increasingly important. But compensation remains a pivotal factor in choosing whether employees stay at a current job or look for new opportunities with better pay.

“Other outside factors may be at play as well,” said Lindsey Nichols, Nextep’s Vice President of Human Resources. “At Nextep, we’ve seen other companies, often located in high cost-of-living areas, attempt to recruit employees by offering higher salaries than we typically see in our lower cost-of-living location. As a result, this shift has prompted us to fine-tune our compensation strategy as an organization.”

A Pew Research Center study from February 2022 found that 63% of workers who quit a job in 2021 said low pay was why they left. Significantly, an average of 3.98 million workers quit their jobs each month in 2021, and similar trends continue into 2022. Now is therefore the time to take a serious look at your company’s compensation as a key part of your employee retention strategy.

A compensation review is a great retention tool to keep in your company’s tool belt. Let’s take a look at some general tips on how to go about using a compensation review to review employee pay at your company.


Firstly, take the time to establish who will take charge of your company’s compensation review. Depending on the size of your company and how many employees you have, an individual could manage the project. Alternatively, you can put together a committee to handle it. Departments involved with company-wide compensation reviews are typically human resources, business operations, and finance.


Go right to the source! Ideally, you’re talking to departing employees about their reason(s) for leaving. If compensation factored into their departure, be bold and ask them what their new pay and job title will be. Use this information in conjunction with other data to help you make compensation decisions.

Also, conducting an anonymous employee survey may be part of your regular process. Include a question about employees’ satisfaction with pay. What are they telling you? Use that data to your advantage!


It takes a lot more than gut feelings to set competitive salaries at your company. Getting access to accurate and verified salary data from trusted sources will be critical in your compensation research. It’s crucial to understand precisely where your company falls in terms of pay – businesses conducting salary assessments typically pay labor research firms for access to verified salary information.

For example, Nextep uses Payscale to help us compare our salaries based on job title, experience, and location to ensure we’re offering pay that’s competitive in the current job market.

Since the market changes often, it’s essential to do these assessments regularly, at least annually. We have found that COVID, inflation, current market conditions, The Great Resignation, and the rapidly changing way people work have caused a big shift in salary data and expectations in the past year, for example.

Once you’ve obtained reliable salary data, your next big task is to spend time analyzing the data you’ve gathered. Compare your company’s pay against the verified salary data to identify gaps in employee compensation and use that information to develop salary ranges and benchmarks for each role within your organization.


Now you have up-to-date salary ranges for your company, it’s time to put the research to good use! Firstly, compare your employees’ current pay against the new salary ranges you’ve created. Then, determine if anyone is underpaid or where you can increase compensation to be more competitive.

From here, you can work on matching employee salaries to market trends. Compare the two to ensure you’re offering the most competitive pay possible for your organization. This step will help you retain employees and stand out to potential candidates in the current job market.


To sum up, being compensated fairly and competitively at work can go a long way to make your people feel valued and appreciated! Be transparent with your people. Let your employees know your company is working to monitor trends in the current job market and actively taking steps to ensure pay is as competitive as possible.

Attracting and retaining top talent is something we pride ourselves on at Nextep. We’d love to chat with you about how we can help your business conduct a compensation review! Our goal is to help you bring in the best and brightest talent and keep them around in today’s changing market.

Let’s talk so we can help your company can join The Great Retention!


Do You Need More Than Just Travel Insurance These Days? (Hint YES)

By John Gobbels
30-Year Health and Public Safety Expert / Chief Operating Officer of Medjet

Despite the current geopolitical tensions in Europe, and the emergence of BA.2 (the newest Omicron variant) in the news, many people will nonetheless be heading out on spring and summer travel abroad. If there’s one thing the pandemic taught us, it was the value of travel insurance, especially “Cancel for Any Reason” insurance (commonly known as CFAR) and medical coverage. But is additional travel protection necessary?

Air medical transport and travel security memberships have been receiving a lot of attention in the media lately, are they really worth the extra cost? For most travel experts, the answer is an emphatic “yes.”

Travel Insurance Has Limitations

Travel insurance is important. The best will cover a good chunk of money back should you not be able (or feel safe enough) to go on the trip. It will cover trip interruption (extra hotel nights if you get delayed, or test positive for your return), medical expenses should you become ill or have an accident, and medical evacuation should you require medevac to the nearest hospital capable of treating you. But even with the best policies, that’s likely where you’ll stay.

You should always read the fine print in your travel insurance plan because the medical coverage is always limited to some extent. Medical treatment costs are capped at a certain dollar amount, transfer by air ambulance to a hospital at home (“repatriation”) is typically only done if “medically necessary”, and “hospital of choice” is frequently misread as “hospital of choice at home” (but really only means hospital of choice in the city you’re currently in).

Membership in a medical transport program like Medjet is affordable, and gives travelers greater control over where they receive medical care. Getting moved to a hospital at home becomes your choice, not left up to an insurance company to determine whether the current facility is “adequate” or not, and whether moving you is “medically necessary”. As medical professionals, you also understand the importance of getting back into a system of care you trust, and back under the higher limits of your own health insurance coverage.

Should you incur treatment costs above covered limits, or desire services not covered, the financial responsibility lies with you alone. A serious injury can quickly turn into a serious out-of-pocket bill, and a single medical transport to get moved home can range from $30,000 (domestic) to $180,000 (international).

Compared to a $99 Medjet membership, you begin to see why so many experts recommend this additional protection.

Security Threats Abroad

While tensions in Europe obviously have travelers nervous, violent crime is also on the rise globally. The pandemic stressed many economies, but perhaps the hardest hit were countries whose economies relied heavily on tourism. Crime has always been present in tourist destinations, but since the pandemic the U.S. Department of State’s Travel Advisory system has shown elevated security warnings for many areas typically thought of as “very safe”.

Medjet’s elevated membership, MedjetHorizon, adds a 24/7 security response line benefit, with in-country response to a wide variety of safety threats: Terrorism, political threat, violent crime, disappearance, kidnap for ransom, natural disaster and more. While travel insurance may also cover some security evacuations, they typically wait for the government to officially issue a mandate to evacuate, which puts you in the same last-minute scramble to get out as everyone else. MedjetHorizon members have access to security responses any time they begin to feel threatened.

It’s Not Just For “Dangerous” Travel

Travelers often dismiss the idea of getting a supplemental travel protection because they aren’t planning excursions like cage diving with sharks or participating in events like Spain’s annual Running With the Bulls. The extra protection doesn’t seem necessary if they’re just sightseeing. In reality, unexpected injuries and emergencies can happen at any time, and to anyone, not just people who are going on potentially “dangerous excursions” or participating in extreme sports or activities. If those types of activities ARE in your travel agenda, again, read the limitations of your insurance policy because many won’t cover injuries sustained while doing them. Medjet has no “adventure travel” exclusions (and no pre-existing condition exclusions under age 75).

Accidents Happen Close to Home Too

An added bonus of being an annual Medjet member is that it covers domestic travel as well, any time you venture more than 150 miles from home. Most of our members buy our protection for the “big international trip” but many of our transports each year end up being for accidents like a slip and fall at a wedding, or a serious illness landing a member in a hospital just a few states away. Right now, we’re inundated with spring skiing accidents and summer will likely bring its typical heavy load of downed motorcycle transports. People don’t think about our program for domestic travel because most health insurance covers emergency treatment in other states. But it can be just as unsettling to be stuck in an unfamiliar hospital a few states away as it is to be stuck in one halfway around the world.


TIA members receive discounts on annual Medjet Memberships by using the link Medjet.com/TIA, or by calling 800-527-7478 and mentioning Transportation Intermediaries Association (TIA).


TIA is the premier organization for third-party logistics professionals in North America and abroad. Membership at TIA adds value to your business and provides resources for growth.
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